N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
| 7. Debt
Total debt is summarized below:
Debt Maturities Aggregate debt maturities are as follows:
Mortgaged Properties At December 31, 2000 and 1999, approximately $9.6 billion and $9.4 billion, respectively, of Railroad properties secure outstanding equipment obligations and mortgage bonds.
Credit Facilities On December 31, 2000, the Corporation had $2.0 billion in revolving credit facilities, of which $1.0 billion expires in March 2001, with the remaining $1.0 billion expiring in March 2005. The facilities, which were entered into during March 2000, are designated for general corporate purposes and replaced a $2.8 billion facility which was due to expire in April 2001. None of the credit facilities were used as of December 31, 2000 or 1999. Commitment fees and interest rates payable under the facilities are similar to fees and rates available to comparably rated investment-grade corporate borrowers. To the extent the Corporation has long-term credit facilities available, commercial paper borrowings and other current maturities of long-term debt of $663 million and $593 million as of December 31, 2000 and 1999, respectively, have been reclassified as long-term debt maturing in the years 2002 and 2001, respectively. This reclassification reflects the Corporation's intent to refinance these short-term borrowings and current maturities of long-term debt on a long-term basis through the issuance of additional commercial paper or new long-term financings, or by using the currently available long-term credit facility if alternative financing is not available.
Convertible Preferred Securities Union Pacific Capital Trust (the Trust), a statutory business trust sponsored and wholly owned by the Corporation, issued $1.5 billion aggregate liquidation amount of 6 1/4% Convertible Preferred Securities (the CPS) in April 1998. Each of the CPS has a stated liquidation amount of $50 and is convertible, at the option of the holder, into shares of UPC's common stock, par value $2.50 per share (the Common Stock), at the rate of 0.7257 shares of Common Stock for each of the CPS, equivalent to a conversion price of $68.90 per share of Common Stock, subject to adjustment under certain circumstances. The CPS accrues and pays cash distributions quarterly in arrears at the annual rate of 6 1/4% of the stated liquidation amount. The Corporation owns all of the common securities of the Trust. The proceeds from the sale of the CPS and the common securities of the Trust were invested by the Trust in $1.5 billion aggregate principal amount of the Corporation's 6 1/4% Convertible Junior Subordinated Debentures due April 1, 2028 (the Debentures). The Debentures represent the sole assets of the Trust. The principal amount of the Debentures held by the Trust at December 31, 2000 was $1.5 billion.
The Debentures accrue and pay interest quarterly in arrears at the annual rate of 6 1/4%. The Debentures mature on April 1, 2028, unless previously redeemed or repurchased in accordance with the terms of the indenture (the Indenture). The proceeds from the issuance of the Debentures were used by the Corporation for repayment of corporate borrowings.
The Corporation has guaranteed, on a subordinated basis, distributions and other payments due on the CPS (the Guarantee). Considered together, the Corporation's obligations under the Debentures, the Indenture, the Guarantee and the Amended and Restated Declaration of Trust governing the Trust provide a full and unconditional guarantee by the Corporation of the Trust's obligations under the CPS.
For financial reporting purposes, the Corporation has recorded distributions payable on the CPS as an interest charge to earnings in the consolidated statements of income.
Shelf Registration Under the currently effective shelf registration statement, the Corporation may issue, from time to time, any combination of debt securities, preferred stock, or warrants for debt securities or preferred stock in one or more offerings. At December 31, 2000, the Corporation had $600 million remaining for issuance under the shelf registration. At January 18, 2001, the Corporation had $200 million remaining for issuance under the shelf registration. The Corporation has no immediate plans to issue equity securities.
Significant New Borrowings During June 2000, the Corporation issued $250 million of floating-rate debt under its shelf registration statement with a maturity date of July 1, 2002. The proceeds from the issuance of this debt were used for repayment of debt and other general corporate purposes. During September and November 2000, UPRR entered into capital leases covering new locomotives. The related capital lease obligations totaled approximately $201 million and are included as debt in the consolidated statements of financial position. In January 2001, the Corporation issued $400 million of fixed-rate debt under its shelf registration statement with a maturity date of January 15, 2011. The proceeds from the issuance of this debt were used for repayment of debt and other general corporate purposes.
Dividend Restrictions The Corporation is subject to certain restrictions related to the payment of cash dividends. The amount of retained earnings available for dividends under the most restrictive test was $3.2 billion and $2.5 billion at December 31, 2000 and 1999, respectively.
|6. Income Taxes | 8. Leases|